2016 (8) TMI 915 - AT - Income Tax

Agricultural land - no documentary evidence to prove that the agricultural land was in the name of the firm - Held that - As rightly pointed out by the Ld. D.R. the assessee had sufficient time, atleast before the CIT(A), to prove that it owns agricultural lands and carried on agricultural activity in large scale which could have yielded more than ₹ 18 lakhs income. No evidence whatsoever was furnished either before the A.O. or CIT(A). Even before the Tribunal, no evidence whatsoever was produced. When A.O. pointed out mistakes in the Tak Patties etc., the assessee could have given proper explanation before CIT(A) with regard to mismatch of numbers in Tak patties and could have obtained proper explanation from commission agent about use of new Tak patty numbers for earlier period. No doubt, as rightly pointed out by the Ld. Counsel for the assessee and supported by the decision of the Apex Court in the case of Dhakeswari Cotton Mills and others (1954 (10) TMI 12 - SUPREME Court ), the A.O. is duty bound to give a proper opportunity of being heard. But it does not lessen the burden of the assessee to support its stand atleast before the First Appellate Authority. In the instant case, the Ld. CIT(A) categorically observed that even after 4 years the assessee did not furnish even an iota of evidence to contradict the stand taken by the A.O. Though some additional evidence is sought to be produced before the Tribunal, the explanation for not filing the same before CIT(A) was not convincing. Even otherwise the evidence filed along with petition under Rule 29 of I.T. Rules is not sufficient to come to a conclusion that the assessee-firm might have earned agricultural income of such magnitude by farming dry land, that too in F.Y. 2007-08 when certificates of Tahsildars indicate that income would be less than what was declared by assessee. Under these circumstances, do not find any infirmity in the order passed by the CIT(A) and therefore, uphold the order of the CIT(A) and dismiss the appeal filed by the assessee-firm.

Summary

Issues Involved:
1. Validity of agricultural income declared by the assessee.
2. Adequacy of opportunity provided to the assessee for proving its claims.
3. Justification of the assessment made by the Assessing Officer (A.O.).
4. Admissibility of additional evidence at the appellate stage.

Issue-wise Detailed Analysis:

1. Validity of Agricultural Income Declared by the Assessee:
The assessee firm declared gross receipts of ?18,62,777 from agricultural income and net profit of ?10,76,880 after deductions. The A.O. found no documentary evidence proving the land was in the firm's name or that the income was genuinely earned from agricultural activities. The A.O. noted discrepancies in the Tak Patti vouchers and concluded that ?15 lakhs of the declared income should be treated as "Income from Other Sources" rather than agricultural income. The CIT(A) upheld this decision, noting the absence of evidence supporting the agricultural income claim.

2. Adequacy of Opportunity Provided to the Assessee for Proving Its Claims:
The assessee argued that the assessment was completed without a fair opportunity to rebut the A.O.'s estimates and assumptions, citing a late receipt of the show-cause notice. However, the CIT(A) and the Tribunal found that the assessee failed to present any evidence even after ample time was given. The Tribunal emphasized that the assessee should have provided necessary evidence before the CIT(A) despite any procedural lapses by the A.O.

3. Justification of the Assessment Made by the A.O.:
The A.O. allowed a nominal income of ?10,000 per acre, totaling ?3,62,777, and treated the remaining ?15 lakhs as "Income from Other Sources." The CIT(A) and the Tribunal upheld this estimation, noting the lack of evidence from the assessee to substantiate its agricultural income claim. The Tribunal also considered the Tahsildar's certificates, which indicated a much lower agricultural income than declared by the assessee, reinforcing the A.O.'s assessment.

4. Admissibility of Additional Evidence at the Appellate Stage:
The assessee submitted additional evidence, including MRO certificates and photographs, at the Tribunal stage. However, the Tribunal rejected the admission of this evidence, stating that the assessee had ample time to present such evidence before the CIT(A) and failed to do so. The Tribunal found the additional evidence insufficient to prove the agricultural income claim and noted that the evidence did not pertain to the relevant financial year.

Conclusion:
The Tribunal dismissed the appeal, upholding the CIT(A)'s order and the A.O.'s assessment. The Tribunal found no justification to admit additional evidence at this stage and concluded that the assessee failed to substantiate its claim of agricultural income. The appeal was dismissed, and the order was pronounced in open court on 20.07.2016.